On Oct. 7, 2024, the General Counsel (GC) of the National Labor Relations Board (NLRB) issued a memorandum asserting that certain “stay-or-pay” provisions unlawfully infringe on employee’s rights under the National Labor Relations Act (NLRA).
In 2023, the NLRB GC issued a memorandum declaring that overbroad noncompete clauses are unlawful because they chill employees from exercising their rights under Section 7 of the NLRA, which generally protects employees’ rights to collective action to improve their working conditions. Notably, the NLRA only provides protections for nonsupervisory employees, so neither the 2023 nor 2024 memorandum affects agreements with supervisors.
The 2024 memorandum expands upon the 2023 memorandum by asserting that stay-or-pay provisions are similarly unlawful. Stay-or-pay provisions are contractual terms that require employees to repay their employer if they terminate (voluntarily or involuntarily) within a specified time period. Examples include training repayment agreement provisions, educational repayment contracts, quit fees, damages clauses, and sign-on bonuses.
The memorandum states that stay-or-pay provisions are presumptively unlawful. However, employers may rebut the presumption by demonstrating that the provision advances a legitimate business interest and is narrowly tailored to minimize infringing on employee rights by showing the provision:
Opportunity to Cure
The GC stated that the NLRB will not pursue cases involving preexisting stay-or-pay provisions if the employer cures such provisions to comply with the above framework by Dec. 6, 2024.
Although the GC memorandum is not binding and has not been adopted by the NLRB, it provides a framework for the NLRB to establish the validity of stay-or-pay provisions and notifies employers that such provisions will be an area of focus for the NLRB’s enforcement efforts going forward.
However, employers should note that similar efforts to limit noncompete agreements have been rejected by the courts, so any NLRB decisions seeking to ban or restrict noncompete clauses could face a similar legal fate. Similarly, the Trump administration is unlikely to pursue the policies set forth in the 2024memorandum. Therefore, while employers may take steps now to comply with the GC memorandum (including reviewing and revising any existing stay-or-pay provisions or updating template agreements to remove such provisions for nonsupervisory employees), they should continue to monitor for updates.
The U.S. Department of Labor’s Employee Benefits Security Administration, the IRS, and the Pension Benefit Guaranty Corporation released informational copies of the 2024 Form 5500, Form 5500-SF, IRS Form 5500-EZ, IRS Form 5558, and their related instructions online.
The IRS will release paper copies of the 2024 Form 5500-EZ and instructions separately on the agency’s website after January 1, 2025. Pension and welfare benefit plans required to file an annual return/report regarding their financial condition, investments, and operations generally file the necessary Form 5500 series return/report along with required schedules and attachments.
The “Changes to Note” section of the 2024 instructions for each of the forms highlights important modifications to the forms, schedules, and instructions. The Form 5500 and Form 5500-SF include changes, as described in a November 25, 2024 news release, related to the following:
Filers should monitor efast.dol.gov for information on when the official electronic versions are available and can be filed using software from EFAST2-approved vendors or filed directly through the EFAST2 website.
Beginning January 1, 2025, Form 5558 can be electronically filed through EFAST2 or filed with the IRS using a paper Form 5558. A DCG reporting arrangement can file a single Form 5558 for plans that participated in the DCG and is not required to attach a list of participating plans to Form 5558.
On November 15, 2024, a federal court in Texas ruled that the Department of Labor had overstepped its authority with the most recent rule increasing the minimum salary for exempt employees. The July 1 increases are void, the additional increase that would have taken effect on January 1, 2025, won’t happen, and the automatic increases that were scheduled to occur every three years are no more.
In short, the whole rule was thrown out and the minimums have reverted to what they were prior to July 1, 2024. This means that most executive, administrative, and professional employees need to be paid at least $684 per week ($35,568 annually), and not the $844 required by the now-defunct 2024 rule. Employees classified under the highly compensated employee exemption need to be paid at least $107,432 per year, as opposed to $132,964.
If so inclined, employers can roll back changes they made to comply with the rule in July and halt any plans they had for the second increase in January. However, they can’t retroactively reduce pay or change an employee’s classification. Employees should be made aware of any changes to their pay or classification before the changes take effect, and in compliance with any applicable state or local laws, which may have specific notice requirements. Employers should also consider the potential impacts on employee morale and do what they can to mitigate those that may be negative. If nothing else, explaining that changes are due to fickle federal law and the needs of the business will help employees understand that your decisions aren’t arbitrary.
On January 1, 2025, the minimum wage for work performed on or in connection with federal contracts will increase as follows.
The minimum wage will increase to $13.30 per hour and the minimum base wage for tipped employees will increase to $9.30 per hour.
The minimum wage will increase to $17.75 per hour (for both tipped and non-tipped employees).
The Department of Labor has published helpful FAQs on Executive Order 13658 and Executive Order 14026. A side-by-side comparison of these executive orders, including the contracts covered by each, can be found here. Notice of the minimum wage increase for contracts covered by Executive Order 13658 and Executive Order 14026 was published in the Federal Register on September 30, 2024.
The proposed minimum salary for exempt executive, administrative, or professional (EAP) employees will increase to $1,086.25 per week, or $56,485 per year. The proposed minimum annual salary to use the highly compensated employee exemption will increase to $127,091 per year. The proposed minimum rate for exempt computer employees who are paid on an hourly basis will be $34.07 per hour.
If these proposed numbers are finalized, the federal wage thresholds will exceed Colorado's, setting the weekly rate at $1,128.00 (or $56,656.00 annually) for EAP positions and $151,164.00 annually for the highly compensated employee exemption threshold under the Fair Labor Standards Act (FLSA). However, unlike Colorado's proposal, the FLSA does not establish a separate threshold for computer employees.
As we know, when state and federal laws conflict, the employer must apply the law that benefits the employee most.
Effective January 1, 2025, the new minimum wage rates for Colorado will be implemented. These updated rates reflect Colorado's commitment to fair compensation standards and align with recent legislative adjustments. Employers statewide must ensure compliance with these new minimum wage levels as they prepare for the upcoming year.
12/29 – Gag Clause Prohibition Compliance Attestation – The Consolidated Appropriations Act, 2021, Title II, Division BB contains a reporting requirement for group health plans and health insurers to submit a Gag Clause Prohibition Compliance Attestation annually through the Center for Medicaid & Medicare Services’ Health Insurance Oversight Systems to confirm compliance with the prohibition. For more information, please click here.
1/31 – Form 941 Filing Deadline for Q4
1/31 – Forms W-2 and 1099-MISC Distribution Deadline 1/31 – Form 940 Filing Deadline
1/31 – Forms W-2 and W-3 Filing Deadline
2/1 – Deadline for Posting OSHA Form 300A
2/28 – Forms 1094-B, 1095-B, 1094-C, and 1095-C Filing Deadline for Paper Filers
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